Bhoothathankettu Hydropower Project Faces Halt Due to Contract Dispute, Resulting in Rs 32 Crore Production Loss for KSEB

The Bhoothathankettu hydropower project has come to a standstill due to internal disputes within the Kerala State Electricity Board (KSEB). The disruption is primarily attributed to KSEB’s concerns regarding the project’s contract and issues related to payment. As a result, the project, which has the potential to generate 24 MW of electricity with an investment of Rs 12 crore, is incurring annual production losses of Rs 34 crore due to contract-related disputes.

The project’s objective is to harness excess water from the Bhoothathankettu dam for electricity generation. It was commissioned in 2016 with a budget of Rs 231.21 crore.

The contract for the project was awarded to a consortium comprising Sree Saravana Engineering Bhavani Company (SSEB) and Hunan Zhang Equipment Generating Company. Significant progress has been made, with 99.7 percent completion of civil works and 88.61 percent completion of mechanical works. The final step involves the installation of the remaining equipment.

However, complications arose when financially strained SSEB failed to make payments to Hunan Zhang for equipment installation. This disruption prompted KSEB’s intervention.

A tripartite agreement was reached between SSEB, Hunan Zhang, and KSEB on April 27. Nevertheless, changes in KSEB’s leadership led to disputes regarding the contract. The current stance of the board questions the validity of the contract, particularly because one of the parties involved is a Chinese company. KSEB reached out to the government for intervention, but no concrete actions have been taken, resulting in the project’s suspension.

Since the project is 90 percent complete, initiating a fresh tender is not feasible. Consequently, KSEB has incurred substantial production losses amounting to Rs 32 crores due to project delays. Furthermore, canceling the current contract could impact the equipment’s warranty.

During discussions in the Assembly, Minister K. Krishnankutty clarified that the commissioning of the Bhoothathankettu project cannot proceed at this time. He emphasized that the decisions taken align with KSEB’s determinations, and any progress regarding project commissioning would depend on the board’s actions in resolving the matter.